Over 70% of Americans have general purpose credit cards.
But if you’re one of those that don’t, and are thinking of taking out a card, there might be various questions you’d like answered. Or perhaps you’re wondering whether there are any vital questions you’ve missed out, when thinking of taking out a card.
Read on for 11 credit card questions you’re going to want to know the answers to when applying for credit…
1. What’s the Difference Between a Credit and Debit Card?
Simply put, if using a credit card you are spending money you are borrowing from a credit card issuer. Debit cards take money that you have in your bank account.
The later takes – or debits – the money straight from your funds. You do not owe this money back to anyone and there will be no interest charged on it.
Credit cards also help build the user’s credit rating.
2. I Have No Credit History; Can I Still Get a Credit Card?
This is a matter of shopping around and looking for a card that caters to those with little or no credit history. For example, cards that offer a low APR (Annual Percentage Rate) often take on borrowers in this circumstance.
There is also the option of a secured credit card that asks the applicant for a security deposit.
3. Do I Need Multiple Credit Cards to Build my Credit Rating?
Different people have different amounts of credit cards – and credit rating is not solely based on credit card usage. So, in theory, you can have several credit cards.
However, this can be dangerous, which can lead to unmanageable debt. This can lead to later payments and added fees and even cards going into defaults. This will have a detrimental effect on your credit history.
It is better to have one or two cards and see the limits increase on those before thinking of taking out more. If this goes well, your credit score will climb. But don’t take out multiple cards simply for this reason.
4. How Do I Apply for a Credit Card?
The best option is to apply via a comparison website, at the issuer’s direct website or by contacting your own bank.
You will need personal details, such as your name, age, address, etc. You will also need information about your salary and outgoings. Your social security number is also required.
5. How Quickly Does Approval Take?
Most cards are rapid, which means you’ll get an answer within a few minutes.
Instant approval is when people with good to excellent credit scores are approved immediately. Others and other companies may take longer and you will be contacted a little later with the decision.
6. Is There an Age Limit When Applying for a Credit Card?
It’s rare that anyone under the age of 18 years old will be able to apply for a credit card in the USA. Some parents do put their children, under the age of 18, as an authorized user on their credit cards, however.
7. What ‘Pre-Approval’ Mean?
A pre-approved offer for a credit card – often sent to you via the mail or email – means a lender has already run a credit check on you and deemed you eligible for one of their cards.
This is a tactic to get people to take one of their cards out and give them your custom. They are essentially seeking you out as one of their ideal customers.
There will still be an application process and you could still be denied, but typically you won’t be.
8. Is It Better to Use a Credit Card or a Debit Card When Shopping Online?
Some online retail offers more purchase protection when you are shopping with a credit card, thanks to the issuer’s insurance policies.
Some additionally offer warranties and rewards with purchases online.
When it comes to online safety, debit card details make you a little more vulnerable. If fraudsters target a debit card, they are taking your direct funds. Credit cards, therefore, might be a safer option when it comes to shopping online.
9. Can Interest Rates Be Lowered on my Credit Card?
This is a case of don’t ask, don’t get.
Sometimes if you contact a credit card issuer to ask about variable interest rates and APR, this can prove fruitful in the long run.
Just by making that communication, and showing you’re a concerned customer, you can potentially lower these rates.
10. What is a Balance Transfer?
This is when you take the amount you owe on another card and transfer it to a new or existing card, increasing the amount you owe that issuer instead.
But what is the point of this?
Many card issuers offer excellent deals on balance transfers – the best being 0% interest. This means, by taking the amount from one card and putting it on a 0% card, you are saving yourself additional costs in the long run.
Check the small print though, as sometimes these deals are only valid for a certain amount of time.
11. Can I Get Cash Back on a Credit Card?
Cashback is when the card issuer returns to you a percentage of what you put on the card in the form of rewards.
These programs differ from card to card and while some might allow you to offset the rewards on an existing card balance, others might give you money off on certain purchases at certain stores or online.
Some even offer actual cash back – ie. funds deposited into your current account.
Got Any More Credit Card Questions?
The above credit card questions are just some examples of things you might want to know when taking out a card – whether it’s for the first time, or whether you already have several cards to your name.
But if there’s any other burning credit card FAQs you have, check out this page. We might have the answer right here, waiting for you.